Schools finally getting E-rate funds

Following a fierce political battle, the Clinton administration is finally giving out $1.275 billion in Net access subsidies for schools and libraries.

June 16, 200411:48 AM PDT

In the wake of a fierce political battle this year, the Clinton administration today announced that it is finally giving out $1.275 billion in Net access subsidies for schools and libraries around the country.

More than 30,000 schools and libraries applied for the discounts--known as the "E-rate"--and the first wave of funding commitment letters went out today, allocating $73 million in discounts so far.

Also being disbursed today is part of the $425 million Technology Literacy Challenge Fund, which gives states money for teacher training and to purchase computers, software, Net connections, and software for schools that apply for the grant.

"The E-rate and the Technology Literacy Challenge Fund will allow our nation to take this giant step forward, improving the education we provide our children," Vice President Al Gore said today at a press conference. "Together we are using our newest tools to support our oldest goals--helping our students learn by giving them the best education we can."

Foes nicknamed the program the "Gore tax" and attacked the FCC's creation of two nonprofit companies to administer the discounts--the Schools and Libraries Corporation (SLC) and Rural Health
Care Corporation. Under this pressure, the FCC had the SLC create auditing systems to prevent fraud and streamline administrative functions.

The E-rate was created to cover up to 90 percent of the internal wiring costs for the nation's poorest schools and to subsidize Net access for the rest of the applicants.

Today 3,000 letters went out securing funding for schools in every state. The most needy applicants are getting the money first. The letters went to schools in which at least three-fourths of the students are eligible for participation in the National School Lunch Program, according to the SLC.

More funding will go out the first week in December, and the last disbursement is scheduled for January--about nine months after the application window closed in April.

Based on the way the program is set up, a vendor agrees, for example, to discount internal wiring costs. The SLC must approve the purchase or service order, and, if it does, the SLC directly reimburses the vendor to subsidize the service. For instance, the school might pay 70
percent of the cost of the service with the SLC paying the remaining 30 percent.

The program is supported through universal service fees paid by long distance carriers to phone companies; the bulk of the cost is passed on to consumers. The FCC estimates that the E-rate accounts for 19 cents of every dollar paid into universal service, which mainly subsidizes phone service.

Funding could reach $2.25 billion for 1999, although it was scaled back to nearly half of that
earlier this year.

As soon as the SLC is done committing to funding for this year, it will open up the E-rate application process for next year. The application window is scheduled to open on December 1 and close 80 days later. The 1999-2000 funding period will run from July 1, 1999 to June 30, 2000.

Proponents of the E-rate were happy to see the subsidy finally come to fruition.

"The rollout of the E-rate today is nothing short of historic," Sen. Olympia Snowe (R-Maine) said in a
statement. Snowe created the E-rate mandate along with Sen. Jay Rockefeller (D-West
Virginia).

"The delivery of these funding commitment letters is especially gratifying when considering that the road to today's event has been anything but smooth from the initial single-vote margin of victory for the Snowe-Rockefeller amendment in 1995 through the often contentious implementation process," she added.